It’s been a little quiet on both the blog writing and blog visiting front the past week or two because it’s the school holidays. I had great intentions to keep up with my blogging habits, but somehow that didn’t quite work out! But that’s okay, it was the school holidays after all.
During the school holidays, I did more decluttering. Ever since reading Marie Kondo’s The Life-changing Magic of Tidying up I have been on eternal declutter mode. I will have to write more about it at some point, but that’s not the point of today’s post. Today’s post is… about hot chocolate. (Or coffee, if that’s what floats your boat, the same applies.)
The Takeaway Culture
I don’t normally have a takeaway coffee or hot chocolate habit. I just don’t feel the need. But when we used to go out for brunch, I would get that to accompany my meal. The other day, for the first time in forever, I decided to go and get myself a medium hot chocolate from a cafe we used to frequent. It was the school holidays and I was out doing errands, I was feeling good about myself so decided a treat would be nice.
I have to order soy milk with my drinks these days as my lactose-intolerance blossomed late in life. They say many asians have that intolerance and I scoffed at it until I developed it myself. Whoops. So one medium hot chocolate with soy milk, please. When the waitress told me it would be $6.50, I got the shock of my life.
Six-Fifty bleeding dollars for a small (don’t let the word medium fool you) cup of beverage?
I paid up, because they had already started making it. But my god, that blew my senses out of the water. Have I been living under a rock, I didn’t realise these morning habits were quite that expensive! I thought $4 for a takeaway coffee was already bordering on excessive, but $6.50 for a hot chocolate?
Now, let me be clear. I don’t actually doubt that they need to price it as such in order to cover cost of overheads, labour costs, equipment costs and so on and so forth. I have many friends who work in the industry, I get it. But looking at it from my point of view, where I used to order these things nilly-willy, I have to wonder just how much money have I thrown away on sub-par hot chocolates? How about those office workers I watch making their way across the city holding a takeaway cup in their hand every single morning? (I’m not judging them, they are welcomed to spend how they like, but it made me wonder about the potential in the regular investment in takeaway beverages.)
This is not a new thing, I’m not breaking new ground. Instead, my one small transaction on a random morning started me thinking like it never did before. I did some research and there’s even a name for it, it’s called The Latte Factor.
The Latte Factor
Popularised by David Bach, the latte factor is meant to symbolise the high cost of small, periodic spending. What he wants you to notice is that the true loss, is not in the money spent but rather the interest that could have been, the potential that had been lost.
He even came up with a calculator! So I inputted my $6.50 hot chocolate, calculated it to be spent once per day, and a generous 8% annual return if it had been put into shares or Ratesetter loans, or anything of that sort. (I know it’s generous!) and an expected set-and-forget of 30 years.
Here are the results:
If you’d like to try your hand at the figures, you can check out the calculator here.
Yeowch. That’s about all I have to say. I didn’t realise just how scary these figures would be. I knew it would be something quite high, but $294,495 on hot chocolate alone for 30 years (if you add in the interest loss)….
Looks like takeaway hot chocolate won’t be entering back into my life for a while. While I know that there are articles that say that these small sums are hardly the vehicle to FIRE, it is most definitely firmly on the anti-vehicle wagon.
The more you know….
And for the record, the hot chocolate was mediocre and way too hot. I burnt my tongue on it. Bleh!